In this FDD Talk post, you’ll learn the following:

• Section I – Background information on the Gold’s Gym franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a Gold’s Gym franchise, based on Item 7 of the company’s 2018 FDD

• Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Gold’s Gym franchise, based on Items 5 and 6 of the company’s 2018 FDD

• Section IV – Number of franchised and company-owned Gold’s Gym outlets at the start of the year and the end of the year for 2015, 2016, and 2017, based on Item 20 of the company’s 2018 FDD

• Section V – Presentation and analysis of Gold’s Gym’s financial performance representations, based on Item 19 of the company’s 2018 FDD, including information on the:

• 2017, 2016, 2015, and 2014 average, median, high, and low gross revenue for the company units, franchised units, and all Gold’s Gym units that had operated for at least two full years as of December 31 of the given year

• 2017 average, median, high, and low gross revenue for the top quartile, 2nd quartile, 3rd quartile, and 4th quartile of company units, franchised units, and all Gold’s Gym units that had operated for at least two full years as of December 31, 2017

• 2017 average gross revenue, payroll costs, occupancy costs, other costs, and EBITDA for the 121 Gold’s Gym company units that had operated for at least two full years as of December 31, 2017

Section I – Background Information

16 Things You Need to Know About the Gold’s Gym Franchise

Announces Strongest Quarter of Worldwide Growth in Company History

1.  In late October 2018, Gold’s Gym announced a record-setting third quarter, the largest for franchise development in the brand’s history. Gold’s Gym celebrated nine international openings, renewed master franchise agreements for Saudi Arabia and United Arab Emirates, and signed a new master franchise agreement to enter Turkey. In addition, Gold’s Gym celebrated one domestic grand opening and signed franchise agreements for multiple locations across three states in the U.S.

2.  Ken Phipps, director of global franchising development for Gold’s Gym, said, “Gold’s Gym continues to distinguish itself as the fitness industry leader, which is exemplified by our biggest quarter of worldwide growth in company history. Our franchise network continues to expand and thrive as we extend our proven business model across the globe with the support of additional sophisticated investors. We anticipate further development in the fourth quarter and look forward to our International Summit in Dubai this November.”

3.  Some of the highlights of Gold’s Gym’s Q3 performance include:

• Three-unit development agreement in West Texas (Midland/Odessa);
• Conversion of original Gold’s Gym Loveland, Colorado location from a competitor gym;
• Development of a location across the street from the world-famous Daytona Speedway in Daytona Beach, Florida;
• New domestic grand opening in Chantilly, Virginia;
• Master franchise agreement to enter Turkey with a 25-unit development plan;
• Renewal of Saudi Arabia’s master franchise agreement, with commitments to add an additional 50 locations in the next 20 years;
• Renewal of United Arab Emirates’ master franchise agreement, with commitments to add an additional 10 units in 10 years, including a new location in Bahrain;
• Four gym openings in India;
• Two gym openings in Japan;
• Two gym openings in Saudi Arabia; and
• One gym opening in Trinidad and Tobago.

Appoints New Chief Marketing Officer

4.  At the beginning of May 2018, Gold’s Gym promoted Dave Reiseman to chief marketing officer. Reiseman brings more than 20 years of brand-building experience across multiple industries, including consumer, fitness, retail, and franchising, to his new position. Reiseman has been an integral part of the Gold’s Gym marketing team for nearly 16 years, most recently serving as the company’s vice president of marketing.

5.  In that role, he was responsible for driving overall brand marketing and communications efforts for all of Gold’s Gym’s locations around the world. Over the past year, Reiseman helped lead a brand evolution for the 53-year-old fitness brand. This work included developing a new creative and marketing campaign, launching a new website and digital experience, and branding new products and services that have defined the new Gold’s Gym Experience.

6.  In his new role, Reiseman will continue to spearhead the company’s efforts to reach new consumers, expand consideration, and drive member engagement and loyalty. His work includes overseeing brand management, creative development, paid media and marketing strategy, digital and social media marketing, customer retention and loyalty, franchise marketing, and influencer marketing.

7.  Brandon Bean, CEO of Gold’s Gym, said, “Dave has been one of the Gold’s Gym brand’s biggest champions for many years and brings exceptional leadership skills, passion and creative vision to the role. He has been instrumental in bringing the new Gold’s Gym Experience to life and creating a high-energy, service-driven marketing department that’s focused on growing our business and supporting our team members, franchisees and members around the world.”

Partners with Gymshark to Launch Limited-Edition Performance Wear Collection

8.  In early May 2018, Gold’s Gym and fitness apparel brand Gymshark collaborated to create a limited-edition performance wear collection, Gymshark x Gold’s Gym. According to Craig Sherwood, senior vice president of franchise and licensing for Gold’s Gym, “Our partnership with Gymshark is just one of the many ways Gold’s Gym continues to redefine ourselves in the fitness industry. This collaboration allows us to further engage with the growing worldwide fitness audience through innovative performance apparel.”

9.  Gymshark x Gold’s Gym was available for a limited time, starting on June 1, on Gymshark’s website. The line of performance wear for men and women was designed to embody Gold’s Gym’s heritage with Gymshark’s contemporary style. The collection channels the Gold’s Gym aesthetic through a unique color palette and tonal logo, with each on-trend piece designed to enhance and accentuate the body.

10.  To launch the new line, Gymshark and Gold’s Gym hosted a pop-up event at the iconic Gold’s Gym Venice. The pop-up event was open to the public and allowed customers to purchase the collection before it went on sale online.

11.  Ben Francis, founder of Gymshark, said, “We exist to create the tools that help people unlock their full, incredible potential and become the best versions of themselves. Our worldwide audience of Generation Z fitness enthusiasts combined with Gold’s Gym’s longstanding fan base worldwide creates a natural opportunity for collaboration which promises to excite followers of both brands.”

Company History

12.  Gold’s Gym was founded in 1965 by Joe Gold in Venice Beach, California. Gold was a former Marine and bodybuilder who wanted to open a proper gym where he and his friends could work out. The bodybuilding community had been growing in Venice Beach since the early 1950s and Gold felt that there wasn’t a good selection of gyms in the area. This first Gold’s Gym location quickly became popular with the local bodybuilding community.

13.  Gold sold Gold’s Gym to Dave Saxe and Bud Danitz, who only ran the gym for two years before selling the business to Ken Sprague. Under Sprague’s ownership, Gold’s Gym hit its stride. Sprague began sponsoring bodybuilding contests, which regularly drew thousands of spectators.

14.  In the early 1970s, Ric Drasin created Gold’s Gym’s now iconic logo, which Sprague put on t-shirts. The bodybuilders would wear the Gold’s Gym shirts during the contests and during photo ops on Venice Beach. This helped Gold’s Gym become recognized as the place to train for bodybuilders. During this time, Gold’s Gym was dubbed the “Mecca of bodybuilding” and was frequented by world famous bodybuilders Arnold Schwarzenegger and Dave Draper. In 1977, the docudrama “Pumping Iron,” which was primarily filmed at Gold’s Gym, was released and spread even more awareness about the gym.

15.  By the time Sprague sold Gold’s Gym in 1979, it was the most famous gym in the world. Sprague sold Gold’s Gym to Pete Grymkowski, Tim Kimber, and Ed Connors and they started franchising Gold’s Gym the following year. The first franchised Gold’s Gym was opened in San Francisco and more franchises were sold across the United States. Within a year, hundreds of franchises were sold and in 1985, Gold’s Gym opened its first international location in Canada. Gold’s Gym has continued to expand since then and is still one of the most famous fitness brands in the world.

Entrepreneur’s Franchise 500

16.  Gold’s Gym did not rank on Entrepreneur’s 2018 Franchise 500 list.

Section II – Estimated Costs

• Please click here for detailed estimates of Gold’s Gym franchise costs, based on Item 7 of the company’s 2018 FDD.

Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees

• Please click here for detailed information on Gold’s Gym’s initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2018 FDD.

Section IV – Number of Franchised and Company-Owned Outlets

Franchised

2015

• Outlets at the Start of the Year:  286
• Outlets at the End of the Year:  255
• Net Change:  -31

2016

• Outlets at the Start of the Year:  255
• Outlets at the End of the Year:  243
• Net Change:  -12

2017

• Outlets at the Start of the Year:  243
• Outlets at the End of the Year:  200
• Net Change:  -43

Company-Owned

2015

• Outlets at the Start of the Year:  146
• Outlets at the End of the Year:  150
• Net Change:  4

2016

• Outlets at the Start of the Year:  150
• Outlets at the End of the Year:  148
• Net Change:  -2

2017

• Outlets at the Start of the Year:  148
• Outlets at the End of the Year:  147
• Net Change:  -1

Section V – Financial Performance Representations (Item 19, 2018 FDD) and Analysis

• The franchisor provides two types of financial performance representations in this Item 19. The first reflects information on Gross Revenue for the 2014, 2015, 2016, and 2017 calendar years, and the second reflects more detailed revenue and expense information for 2017 for certain of the franchisor’s affiliates’ Gold’s Gym Facilities.

• All of the Gold’s Gym Facilities whose results are reflected in this Item 19 are full amenity Gold’s Gym Facilities and none are Gold’s Gym Express Facilities.

• In this Item 19, “Gross Revenue” means all revenue (without discounts except as otherwise described in this paragraph) received or otherwise derived from operating the Facility, whether from cash, check, credit and debit card, barter, exchange, trade credit, or other credit transactions, and regardless of collection or when the Facility actually provides the products or services in exchange for that revenue. “Gross Revenue” excludes (a) sales taxes, use taxes, and other similar taxes that a Facility adds to the sales price, collects from the customer, and pays to the appropriate taxing authority; and (b) any bona fide refunds and credits that the Facility actually provides to customers.

• The franchisor derived the figures for Company Units based on their internal unaudited financial statements. It derived the figures for Franchised Units based solely on the information that the franchisees gave to it.

Part 1 – Statement of Average Gross Revenue for the 12-Month Periods Ended December 31 of 2017, 2016, 2015, and 2014 ($ in thousands)

• For purposes of the Gross Revenue disclosures in this section, for each year in the charts below, the franchisor looked at the total number of Gold’s Gym Facilities operating as of December 31, then excluded those Facilities that had not operated for at least two full years as of December 31 (to eliminate start-up volatility).

December 31, 2017

Company Units